The best friend a small business can have is a great banking relationship. While every bank in the country talks about relationship banking there are not too many that deliver. Unfortunately, if you pick the wrong bank you might end up feeling like you are in an abusive relationship. So how do you pick the right one?
Here are some tips that don’t take as much time as speed dating and can help you build a strong relationship with your banker;
• Ask where lending decisions are made. Do you want a guy in Fargo who doesn’t know you, your business or the Coachella Valley market deciding whether or not your business loan is approved?
• Make sure you are compatible. For example, I have a friend who loves sushi. His girlfriend thinks it’s bait. Think they have trouble deciding on where to go to dinner? If you are a small business owner don’t go to a bank that specializes in consumer lending. At some point you and the bank might not be able to make each other happy!
• Lets talk about communication. Be positive you understand the loan documents. Identify your main point of contact. Don’t be afraid to ask if you don’t understand something! For example most loan covenants require a 1.25:1 DSCR. What that means is that for every dollar of debt payments you have $1.25 of recurring income. The regulatory agencies require banks to enforce loan covenants which could mean a problem for both you and the Bank. Divorces are painful, even in business and you can avoid a lot of arguments if you set the tone for communication up front.
• Speaking of communication…most spouses don’t love bad surprises. Neither do bankers. If you have problem, talk to your banker early. Be clear about the issues, discuss your plan to work through it, and don’t be afraid to get their advice. The right banker might even have some ideas of how to help.
For more information about West Valley National Bank contact Terence Davis at 760 883 8003 or at [email protected]
Candace Hunter Wiest is the President and CEO of West Valley National Bank.